Pursuing a growth strategy
A Northern Rock case study

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Page 2: Company growth

Sample of growthAll organisations need to have objectives - the end purposes the organisation seeks to achieve. For example, a common business objective is to make a profit. Northern Rock's main objectives are to grow profitably, drive down costs to improve cost efficiency, and delivering a good return for shareholders.

By expanding profitably, it is best placed to give its customers what they want - high-quality service. There are a number of ways in which a business can grow.

External/inorganic growth

A business can develop by taking over or joining together with other businesses. For example, Cadbury Schweppes was formed from the merger (joining together) of Cadbury (a British confectionery manufacturer) and Schweppes (an American soft drinks manufacturer). Northern Rock could therefore grow by buying another financial services company.

Internal/organic growth

This takes place when a business ploughs back large parts of its profit into expansion. This is the chosen route for Northern Rock. Profits are ploughed back into new buildings, developing better Information Technology Systems, training staff and expanding the business in other ways.

As it matures, it is possible to make more and more loans. Northern Rock therefore grows like a snowball. With each turn, the company becomes bigger and more profitable to the benefit of all the stakeholders.

Northern Rock | Pursuing a growth strategy